China EVs & More

Episode #134

September 28, 2023 Tu Le & Lei Xing
Episode #134
China EVs & More
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China EVs & More
Episode #134
Sep 28, 2023
Tu Le & Lei Xing
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CEM #134 Transcript
Recorded 9/22/23

Tu Le:
Hi, everyone and welcome to China EVs & More where my co-host Lei Xing and I will go over the week's most important and interesting news coming out of the China EV, AV and mobility sectors. What Lei and I discuss today is based on our opinions and should not be taken as investment advice. For those that are new to the show, welcome. And to our loyal listeners, welcome back. We ask that you please help us get the word out to other enthusiasts about this podcast and tune in again next week.

My name is Tu Le. I am the managing director at Sino Auto Insights, a global management consultancy that helps organizations bring innovative and tech-focused products and services to the transportation and mobility sectors. I write a free weekly newsletter that we pull many of our discussion topics from. You can sign up for it at sinoautoinsights.com, which I encourage you all to do. Lei, it feels like we're kind of back to normal. Can you please introduce yourself?

Lei Xing:
Indeed! Good morning. This is your co-host Lei Xing, former chief editor of China Auto Review, and this is episode #134. Lots happened since we talked last Friday. The UAW strike is into its second week and expanding. So let's get right into it, NIO phone. I mean…

Tu Le:
Xihuan bu xihuan? You like it?

Lei Xing:
That's what I was going to ask you first, like, are you going to buy it?

Tu Le:
First of all.

Lei Xing:
 Takeaways.

Tu Le:
I am an iOS guy. I am an Apple guy. And this is an Android phone. I don't really care for the Android, but I'm not objective either, right? So I drink the Apple Kool-Aid. But that being said, I was a bit cynical and jaded about them launching this, but I look at, I took a step back and thought about what Li Bin’s vision is for the company. They've always called themselves a lifestyle brand. And this would close that loop, because I’ve made this example before: tech companies know what we buy, what we search for, what entertains us. And certain tech companies know where we go, Uber, DiDi, but not one company knows all of that. I think that's what Apple is attempting to do. I think Google is going to also try to do that but with this marriage of phone, lifestyle in vehicle or transportation, I think NIO is out ahead of everyone now. Now their challenge is getting enough of those vehicles on the road so they can pull that data and create those services that make them, that make their customers loyal, that create that stickiness. So I wrote in the newsletter that I'm going to be sending out in about an hour and a half, 10 years from now, if they sell in volume, we're going to look at this as a logical and brilliant move. What do you think?

Lei Xing:
So I agree that yes, I think it's a leap forward for NIO in terms of getting that lifestyle point across with this phone, and really, I think this is the first time that we're seeing what's possible in terms of the so-called seamless integration of a phone and a car and a smart EV. From that perspective, I think NIO is ahead actually of the Apples, of the Xiaomis, of the other ones.

Tu Le:
Yes, without question. 

Lei Xing:
Yeah, but the questions is, is that going to drive sales of their cars? No, but again right you stress the focus on being a lifestyle brand and to me, the phone is one of their millions of lifestyle products that are on sale on their platform, on their app, right? So for the users, and you point to the Android and the iOS so Li Bin said half of their users have iPhones, and the other half have Android. So he was saying that…

Tu Le:
Just kind of a meaningless, which is kind of a meaningless statistic.

Lei Xing:
So he was saying that, for the Android users, I mean why not switch to the NIO phone, right? And for the iPhone users, he was saying that for many of these, you know NIO is a premium brand and these owners have multiple phones. So it's probably pocket change, I mean the pricing, $1,000 for them to get an additional phone. So it's nothing right? And then I heard that this ordering system was didn't crash, but there's a lot of demand, I heard.

Tu Le:
Or a lot of interest, maybe not demand, maybe a lot of interest, right?

Lei Xing:
So there's 400,000, roughly 400,000 NIO owners, right? Let's say every one of them gets a phone. You can do the math, right? So I mean it was, but…

Tu Le:
I thought the take rate needed to be above 75% in order to, for NIO owners, in order to kind of making a real impact with the phone. That's what I predicted.

Lei Xing:
Yeah, right. And then the other question is, what about non-NIO owners? What about you and I if I wanted to get a NIO phone without owning a NIO car, then you lose that feature, right? Because you don't have a NIO car, then you don't have that seamless integration process.

Tu Le:
To your point Lei, this gets into the complexity of in the United States, there's Alexa, there's Google, and then there's Siri, and there's home things and home products. So if you're a Xiaomi phone user and you've connected your entire home to the Xiaomi ecosystem, it makes making that switch a bit more difficult.

Lei Xing:
Yeah, and we're still looking to see what Xiaomi is going to do with the smart EVs, going from the phone to the EVs rather than NIO EVs going to the phone, and what's going to happen there, right? But NIO has kind of put a kind of a benchmark on what can be done almost. And what Xiaomi’s going to do, Huawei, right? They have their HarmonyOS, they have their phones.

Tu Le:
We'll talk about this later. But JIYUE too now coming out with the most technologically advanced vehicle on the road in China, probably. We'll talk about that a little bit more. So let's continue this NIO discussion.

Lei Xing:
I think NIO, but I think the phone took too much of a limelight because what William Li shared. I think there were a bunch of other more important stuff that may have been overlooked by the phone, because the phone was so, everybody was looking forward to it, right? And he put on a CTO hat. He spent an hour and a half talking about really, I think he gave a glimpse of what NIO is really all about with those three points, nine things and 12 areas, right? He's spelled it pretty clearly. So that was interesting. It was and to me, like I had three reactions. So the first reaction was a déjà vu moment, because seeing him carrying a phone, I said he channeled Steve Jobs, Lei Jun and YT Jia at the same time, right? Second reaction was, yeah, this is a toy for the NIO owners. And third reaction was exactly what you said before that they've with this phone, they've showed what's possible in terms of phone-EV integration. And they could actually, I don't know, a leader and others could follow so that those are my reactions, but I personally I am not a fan. I rather see their sales do better, right? The vehicle sales.

Tu Le:
Yeah. And so if I'm just looking at the possibilities and there's two other brands that are supposed to be launching right? Alps and what's the other brand I forget. 

Lei Xing:
Firefly.

Tu Le:
Yeah NIO’s going to be launching two other brands, so the phones could expand. And there was a comment here that the phone was never created to be the main driver of sales. Totally agree. Totally agree. Unfortunately, it overshadowed the entire NIO day a little bit. And I think some of the technical aspects, when he put his CTO hat on, were extremely important and…

Lei Xing:
And difficult to understand, and technical. Especially when Ren Shaoqing, the VP of autonomous driving, I think he appeared to talk in public for the first time. And really their approach to the city NOA is quite interesting because it will be user generated rather than I push it out, I’ll tell you this can be used here, but they want their users to tell them where they are commuting and where they want their city NOA feature to be capable.

Tu Le:
And I completely agree with you, because it seems that there's always a bunch of sizzle with NIO, but they need to get that intersection of brand loyalty and just the marketing and the comms. They have that in spades, right? Everyone wants to pay attention. How does that translate into selling more vehicles? There's still that disconnect. Now, their trajectory is going the right way. They've redone all their vehicles. They've priced them a little bit more aggressively. But hopefully, after the price war is over, they can start to gain more share as well versus their competitors. 

Lei Xing:
Yeah, so here's how they are going to sell more vehicles. Now, the NIO brand, we can pretty much say it's a 20,000, at most, 30,000 a month. And that's already pretty significant at that price range. The Alps is going to be the platform that will use the 800V and the battery that is showed the cylindrical battery pack under development. Now NIO said a lot of in-house development, now put an asterisk on that because the chip is actually jointly developed with Innovusion and the battery. So there was a recent, I guess the rumors saying that their own battery development had a snag, and they were working with Svolt on the cylindrical, the cells and my source tells me what they showed is indeed the 46XX cells for the battery system, and anything is possible with regard who they're working with. So I think there is that deadline of putting that 800V, and by the way, 800V, they are saying that because the 800V, they would require the use of the cylindrical format, like the Neue Klasse using the EVE similar 46XX, so they're racing, right? So to get more sales, they have to get that out there. And then the cheaper Alps brand coming out next year. Now that should be the sales driver, I think if they want significantly more volumes, right?

Tu Le:
Remember that the price war has changed the spreadsheet, the profitability spreadsheet for everyone. Because coming into the year 2023, I think most folks were looking at decent volumes or forecasting sales for decent volumes. The price war has thrown that into a huge, thrown a monkey wrench into that spreadsheet. So now, with NIO reducing prices a few months ago by $6,000 that pushes out profitability for the NIO brand for a little bit longer. And it means that they need to get to that 20, 25,000, 30,000 units a month, in order to get to that level of profitability where everyone's looking at them and saying they’ve become a leader in the space. Now, Yang Wang is there now with RMB1 million vehicles? So I don't know. Do you think that, because Wang Chuanfu is saying that it's going to take buyers from the G-Class. Do you also think that it's going to take buyers from NIO?

Lei Xing:
I think it's a completely different segment, it’s for the “tuhaos” (newly rich).

Tu Le:
Okay, that's what I think, too.

Lei Xing:
But here's the thing, you mentioned about the price war, so three case in points. The 2024 Xpeng G9, starting at $263,900.

Tu Le:
That’s an aggressive pricing.

Lei Xing:
A year ago, they launched at RMB310,000. The JIYUE 01 starting at RMB259,900. And the…

Tu Le:
I thought for sure that was going to be over RMB300,000, so.

Lei Xing:
And the Livan 7 launching at the RMB100,000-170,000 range, and appears to be the first smart EV (SUV) under RMB200,000 to have a LiDAR. LeapMotor, right, LeapMotor launching the C01 and C11 Super EREV at the RMB150,000 price point. All of these are just ridiculous price points.

Tu Le:
It's dangerous because after the price war, they're all going to try to get some of that margin back, I think. And it's going to be really difficult to convince the Chinese consumer to pay more for the exact same product.

Lei Xing:
That's exactly what Li Bin said, right? We're doing this because we want higher margins with the LiDAR chip. Saves you what, $100 a vehicle or something? And others. So I mean, volume, profitability, I mean balancing that is not easy.

Tu Le:
Man, so anything else about NIO day?

Lei Xing:
No, I thought that NOP+ thing was interesting. The LiDAR chip, obviously, that's to reduce cost, increase margins. The battery, right? The battery, definitely they're slow, right? You need investment, I think the cylindrical cell, if you look at the Tesla 4680, it's been 3 years since the Battery Day. And right, there's not been much traction on that front. So that shows the difficulty of

Tu Le:
Eking out, trying to eke out efficiencies or price reductions.

Lei Xing:
The EVE’s 46XX for BMW, that's 2026. We're still 2-3 years away. 

Tu Le:
That's a lifetime away. 

Lei Xing:
Yeah now you're going to have that ready for the Alps next year, so a lot of pressure.

Tu Le:
But I feel that watching Li Bin and kind of following from day one, you and I, I feel that he's still focused on his vision. He's not making radical changes to that vision. So I think that he's still consistent with what he's trying to do, but the market is dictating some of the moves that he needs to make for NIO. But I still feel that there hasn't been any real changes to the overall strategy, long-term. It's interesting to see because with Xpeng, Li Auto a little bit, they've kind of moved and altered strategies, it seems. But with NIO, they seem to be pretty consistent.

Lei Xing:
I mean, it's, at the end of the day, it's the way how I look at it, it's either distractions or additions. And we'll see that play out.

Tu Le:
And I think it's important that he explains some of the other stuff that's going on. And at the end of the day, there was a CNBC article about the iPhone 15 launching in China.

Lei Xing:
Huge crowds, right?

Tu Le:
In Sanlitun, right? Our favorite place, one of our favorite places in Beijing, right? There's a huge flagship store in the Sanlitun area of Beijing in CBD, near CBD.

Lei Xing:
Next to the JIYUE store.

Tu Le:
Yes. The earliest person got there 1 am before the store opened.

Lei Xing:
Yeah I saw that video.

Tu Le:
So I don't feel that NIO phone is going to take too many customers away from iPhone.

Lei Xing:
I think the overall, besides the phone and everything else that was shared, I think this is still a huge R&D phase setting up for the future, right? Look at, the 4th generation of the EDS electric drive system is coming next year. The 4th generation of the battery swapping station is coming next year. 500-kW super charger. I mean the way how the vehicles are made, what they're doing with the so-called global digital operations, right? NIO Link.

Tu Le:
What will be interesting to see Lei is whether or not they rush the NIO phone to market outside of China.

Lei Xing:
It’s NIO speed, right? But they said because there is some numbers about European sales. And first of all, it's not enough to support the phone. Second, Lihong, he said the numbers was not correct. It's actually much higher, but you take it with a grain of salt.

Tu Le:
Well the numbers that are being reported were pretty anemic. They were like 800 units.

Lei Xing:
800 units in the first half, which actually, I feel it's not bad, but…

Tu Le:
It would be concerning to me if they only shipped 800 units. But so let's move on. Hey, can you remind us your visit with Frank in Sanlitun with JIYUE now that it's officially launched? I can give you my take.

Lei Xing:
So they got how many orders in 24 hours? Over 10,000 orders.

Tu Le:
10,000, yeah.

Lei Xing:
And he showed me, it was a chance meeting, coincidence that I met him at the experience center. And he just showed me both what it's like inside and outside some of the AI voice recognition, UI capabilities. I posted some videos on twitter, but.

Tu Le:
So there's a decent amount of excitement. I got messages in WeChat from friends who were asking me a bunch of questions about it. They went and looked at it, kick the tires. Some of them said that the voice recognition, they're still not comfortable with it yet. And we have to remember that JIYUE with this product is changing habits.

Lei Xing:
What he showed you back in April is different from what he showed me in August, which is different from what he…

Tu Le:
It’s got to be six or seven versions better.

Lei Xing:
Yeah, so it's constantly iterating, I believe.

Tu Le:
And remember that it’s iterating, but also with more and more data, it's improving. We should expect the voice recognition to be a bit clunky. And let's talk about this for a second Lei. Speaking Baojun like official Chinese language, the terms are different, the accents are different. You speak to someone who's from Shanghai, they have a completely different accent. You speak to somebody from Sichuan, they have, Xiamen, they all have their different accents. And so two people said that that I spoke with that went and looked at it because they were curious. They thought physically design wise, it looks great. And they told me this is, more than two people, they all told me that the fit and finish of the interior is great, surprised them. So that goes back to Geely.

Lei Xing;
That shouldn't be surprising.

Tu Le:
Well. But you and I are the guys that know exactly Geely and Baidu, but to other people that aren't car people, they just know JIYUE as a brand new brand, okay? And so maybe they think it's a startup. I shouldn't expect too much from a manufacturing standpoint, but they were pleasantly surprised. And so these are the show cars. We'll see once they get out on the road and stuff.

Lei Xing:
Yeah they're produced in the Hangzhou Bay smart factory, which makes the ZEEKRs, I believe.

Tu Le:
We have to, next time we go Lei, you and I have to go hit up Yilei or Ash and get a tour of that factory. I want to check it out. But so the initial software, AI and the voice is probably going to be a little clunky, but it should improve significantly over time. It's using a database from Baidu. That's probably one of the largest in China. But it is, it’s going to be, it's forcing people to change habits. And initially it's going to make a lot of people uncomfortable. There's going to be enough early adopters that love that stuff among the Chinese consumers that sales should be, okay, especially at the RMB250,000 price point. I tweeted that this is aimed directly at the Model Y buyers.

Lei Xing:
Yeah, I said it's just completely different from what's out there, because the way it's, no door handles, no nothing, no buttons. Interior and exterior voice recognition, and then the talking car, right? The talking car.

Tu Le:
Yeah. And this is the thing. This is like walking a tightrope without a safety net, because what companies have done up to this point is maybe they peppered in some voice recognition commands, but they've also had a physical door handle as a failsafe. This is, okay, you get none of that. And so I mean, you think about it. You could probably see Geely doing a joint venture with Oppo or something like that to create a phone for their ecosystem, right?

Lei Xing:
They already have Meizu.

Tu Le:
So that shouldn't surprise anyone either. But I’m, because Frank is our friend. I'm very proud of what he's put on the road. And I’m sure it's going to do very well.

Lei Xing:
And then the G9 was interesting because they, He Xiaopeng put the flag on the ground again and saying the RMB250,000-300,000 range, they want to be like the leaders in that range and then with the G6, it's the RMB200,000-250,000 range. And then they're coming out with that MONA, right? MONA, which is RMB150,000 range. And I thought it was interesting, I think. Was it Ren Shaoqing? He kind of took a swipe maybe at Xpeng for saying they're rolling out all these features when He Xiaopeng read out all those cities, 50 cities, that they're entering, the XNPG, by the end of this year. I thought that was like funny. It was like a crosstalk, right? And then Ren Shaoqing, he said, if this car can only achieve, let's say, city NOA in a few km of the city, they're saying that it'll be ready. We're not going to do that. It's like.

Tu Le:
I think that's fine, man. It's like a little bit of ripping each other. I think that's okay. But the concern I have with Xpeng now is that they've priced so aggressively that they're going to need long-term BYD type volumes to be profitable. They can't sell 20,000 a month and expect to be profitable, because those margins for the G6 and the G9, they have to be razor thin. And so they probably have 300,000 units of capacity that they need to put somewhere. We've talked about the anti-subsidy. Have we talked about that last week Lei?

Lei Xing:
Yeah, we talked about that.

Tu Le:
Yeah so again, RMB260,000 for the G9, aggressive pricing and…

Lei Xing:
$35,000.

Tu Le:
If it clearly doesn't see a bump in sales, I would be very concerned if I was Xpeng because it's also going to be launched in Europe, I think, right? Let me ask you and move on to your thoughts on the UK pushing out to 2035, their ban on the sale of diesel and petrol fueled engine vehicles.

Lei Xing:
It's a tough, what, conundrum that they're kind of facing. At the end of the day, 2035 is still, I mean, Sunak, he said, right, we're still, 2035 is what many of the other countries and quite a few states here in the U.S. including Massachusetts, where I’m at, right? It's still pretty aggressive, but I think for, the criticism was, for quite a few investments that are taking place from OEMs right? Let's say I think…

Tu Le:
Ford complained. 

Lei Xing:
Yeah, I think there's 1.5 battery Giga factories announced for UK? One of that being the JLR believe it was a few weeks ago, right, that was announced. And I think it's when you make that type of announcements with the understanding of the 2030 deadline. And then this being pushed back, I think it's kind of sickening, right? Kind of. But the other side of it, I think, is more maybe about protection, giving a little bit more time for the, I guess, domestic players to get ready. And in that statement, I think that was announced by him, there was a mentioning, again, of similar to the anti-subsidy probe that oh China, how many years have been subsidized and stuff like that, right? So I think there was a hint of kind of a protectionistic.

Tu Le:
Anti-China sentiment.

Lei Xing:
And they know that they're not going to be ready for if these Chinese EV Inc. are coming in. And they have the products, they have the affordability, so.

Tu Le:
One thing that I think we should take note of Lei, is that the BYD Han, the BYD Tang, pricing in Europe is not super aggressive. It's actually pretty expensive. We talked about it. So it's not across the board every Chinese EV that's been launched in a European country is like super priced aggressively. I think it's important to note that.

Lei Xing:
And it was funny because the government they put out this chart, right, of the latest which countries are banning ICEs in which years. At the very end there's three countries listed, basically including China that says that there's no announcement yet. So it's almost like, from the UK's point of view, hey look at, China hasn't even announced a ban yet. We still at 2035. But I think it's smart for China to not announce any deadlines, because then you have these, right? I think it's being discussed, but I think China is very careful on putting out a deadline which requires a lot of commitment. 

Tu Le:
Well they've effectively made some bold goals, though.

Lei Xing:
But at the same time, China has the highest penetration of NEVs.

Tu Le:
And the market has taken over for a lot of the subsidies that were in place over the last 8, 9, 10 years. So my quick take: 2030 was an unlikely time frame to begin with. The key here is that I've spoken to a number of my dear British friends. They're not subsidizing the purchase. The UK government is not subsidizing in any significant way the purchase of an electric vehicle. It doesn't work that way. Look at the United States, look at China. In order to get that fire lit and burning brightly, you got to put your thumb on the scale. So you can push it out to 2035. But if you don't give a buyer an incentive to make that purchase, it's going to be a hard sell still, especially if EVs continue to be more expensive without that subsidy, okay?

Lei Xing:
Yeah. And comparing the UK with Norway, so Norway obviously sticking, right, I think was it 2025 or 2030?

Tu Le:
I want to say 2030.

Lei Xing:
Yeah. But the difference being, right, so Norway is an open market. There's no automotive industry in Norway, whereas UK there's a huge glory of the legacy autos and brands and being a huge industry. Now, I think that's the burden, right? That's the burden that…

Tu Le:
But Lei I think it's important to note that Norway's vehicle passenger vehicle market is like 200,000 units.

Lei Xing:
Small. Right. And UK is still pretty big. And in terms of export.

Tu Le:
Almost a million, I want to say. So Brexit has kind of thrown them a loop a little bit. But they have the same concerns as Europe with regards to imported vehicles. And one of the other things that I want to mention is that one of the largest exporters from China is not even a Chinese company, it's Tesla, into Europe. So that should be also recognized. And the share, the current share of EVs to ICE vehicles exported to Europe is still pretty small. It's growing significantly, but it's still pretty small. And there isn't, there's no, if the UK or EU wants to throw up some sort of Inflation Reduction Act or any type of protectionism, they can, right? It's up to them. It's, but you know this and I know this, and I spoke to Edison about this, it's like, there will be likely retaliation.

Lei Xing:
Yes sir and we are talking about France, which is announcing this new subsidies, starting at the beginning of 2024, which may be putting restrictions on where the EVs come from and where they are made, right?

Tu Le:
Oh without question they will.

Lei Xing:
These things are going to come, right? But is that going to stop.

Tu Le:
Well remember that Peugeot, Citroen, Renault, the French companies aren't really in any significant way a player in the China market. But the minute that tariff or protectionism, the minute after that protectionism is announced, I bet you the LVMH share price tanks. That's the game they play, right? I think it's important to remember that.

Lei Xing:
The fact of the matter is that China is not becoming less of an export base, it’s going to be becoming more of an export base from these foreign legacies.

Tu Le:
Yes, it's not just Chnese, it's going to be Volkswagen, it's going to be Ford. So it's going to be an interesting next couple of years from a trade standpoint for sure. 

Lei Xing:
And then we had this big, huge, sharp contrast of Gotion investing in the Gottingen factory versus a $2 billion U.S. Illinois factory, I mean that the, it was just low key, so much low key on the U.S. one and so much…

Tu Le:
And still nothing on the China side. There's nothing being announced about these transactions in China media.

Lei Xing:
Not as much as the Germany one, because right, it's open arms. And the other important thing is, specifically the Lower Saxony where Volkswagen is based, right? Wolfsburg has as much interest in Anhui Province, as much as Anhui investing. So it's kind of mutual, right? And right? You had this provincial governor visiting different German companies during that trip. And Volkswagen has the only R&D location outside of Germany, let's say, being in Anhui, the 100%TechCo, right? So this is the really, I guess, intertwined more than any other examples, I think.

Tu Le:
Yeah, man, I think the United States is a pretty clear-cut path. Europe is, there's going to be internal bickering between Germany and France on how to deal with the Chinese EV exports. But I've been told by quite a few Germans that there's going to be a lot of bark, but maybe no bite. So I guess we'll have to wait 13 months, why it takes 13 months, I have no idea, but it's going to take a 13-month investigation to figure out that Yes, China has been subsidizing its EV sector since 2009. But I think also we should point to Europe also subsidizes its automotive sector. So everyone does it. And I think there was a point made, I posted something on LinkedIn. One of the comments was China forced the Europeans to do these joint ventures. First of all, China didn't force anyone to enter the Chinese market 30 years ago. I think let's make that distinction right there. They chose to do that. Now was the requirement onerous. You could argue that it was, but I would also argue that Volkswagen wouldn't be who they are without China. There's this symbiotic relationship here that now that a there's a distinct disadvantage on the European side, people start crying and wining about it. The other thing that I think is important Lei, is that this whole tech transfer thing through the joint ventures never happened, because none of the Chinese domestic players ever really became significant players on their own on the ICE side. And the Europeans don't have EV IP, that came from China. Those are my two biggest things. What do you think like, because these are misconceptions, right?

Lei Xing:
Yeah, I definitely agree. I think that the market for technology is, it's almost the same as saying the ‘wandao chaoche,” right? Overtaking the foreigners on the curve that this all these Chinese sayings, I think they are very superficial. And at the end of the day, how much technology was these foreign legacies was willing to concede?

Tu Le:
While they're making money hand over fist?

Lei Xing:
I think we have to give them credit for growing the market in China to what it is. And really a lot of these management professionals right now working for the Chinese companies, they more often than not, aside coming from the tech companies, they come from these joint ventures, right? Because they learn the trade and the management wise and establishing the sales network, channel, right? These you have to credit to the foreign OEMs. But then at the end of the day, right? Once these subsidies, once these policies end, it's China figuring out a way really to kind of overtake on a corner, which is EVs and batteries. And these other things…

Tu Le:
I’m trying to be objective here. Now, should they have done these joint ventures? That's a business decision that they made.

Lei Xing:
And I think the other example yesterday was the launch of the Lingxi from Dongfeng Honda. And that's a great example of how the joint ventures are trying to catch up. I mean that was not the first time Dongfeng Honda launched their own brand and trying to become…

Tu Le:
More brands by the way, more brands.

Lei Xing:
So trying to become the joint venture Smart EV startup. Now that's the new term I think. I think we're going to see more of that.

Tu Le:
The ID. series is not doing well so that joint venture is not doing well. Chang’an basically abandoned Ford.

Lei Xing:
I think ID. is the only relatively successful foreign EV brand in China right now.

Tu Le:
Yeah relatively compared to the other joint ventures, not to EV companies.

Lei Xing:
And so you're going to see probably more of the Lingxis coming where they're trying to be like a local, the cars are locally developed, locally designed with branding aesthetics and the feel that looks more the current Chinese smart EV way.

Tu Le:
And you got to point to the U.S. automaker GM for being the OG with Wuling. So you can debate GM success in China over the last few years, but you can't debate that Wuling has been a huge success from a sales volume standpoint and from a brand, growth of the brand standpoint, it's just kind of frustrating a little bit, because I, you and I try to be as objective as possible. We praise U.S., we criticize U.S., Europe, China same same, but like to say that you were forced to do this, Volkswagen doesn't get to 10 million without China. Full stop.

Lei Xing:
There's no doubt that there's protectionistic measures in every country and market in the world, including in China, right? We shouldn't, the market for technology was…

Tu Le:
I think it's important to, I think it's important to recognize all of that.

Lei Xing:
Yeah, so market for technology was kind of a protectionist measure, but it wasn't kind of forcing you to do something.

Tu Le:
And it wasn't successful.

Lei Xing:
They found the Chinese partners and they were successful for many years.

Tu Le:
Together they were successful. The other thing that I want to mention is that China is now, the shoe is on the other foot, because for the last 40 years, they've just had incoming foreign direct investment. Now, their companies are trying to enter foreign markets. They're getting pushed back. So this is that shoe on the other foot, right? You treated us this way, entering your market. So we're going to treat your companies this way entering our market. This was a long time coming.

Lei Xing:
It's so interesting seeing right? That the iPhone latest iPhone, the fever, the fanfare, whereas it's not the same in the car market that these foreign brands are losing their attractiveness. Whereas the iPhone is still, right? It’s…

Tu Le:
But Apple is just very unique. There's probably ten brands that are just globally, super unique when it comes to products, brand loyalty, innovation, and all that stuff. So.

Lei Xing:
There's just more, I guess nationalistic sentiment over on the EV side of it than on the phone, but though Apple doesn't have the number one share in China or the world, right? So but still that’s…

Tu Le:
I think this was a good conversation. I got my 30 seconds to bitch at the very end. So.

Lei Xing:
Good for you. So while we were, just a shout to Baidu and Pony, first of all, to finally getting that permit to offer paid fully driverless rides, and also getting to test out these routes from the Daxing Airport to the economic development area. I guess, big milestones.

Tu Le:
Those domains, what's that called? There's something domain, are widening significantly.

Lei Xing:
But so the only caveat is that these testing from the airports, the district, there is safety drivers.

Tu Le:
I think that's important. I don't have anything else. Thanks everyone for joining us. Please join us again next week. We should be 9 am so Will, if you're able to join and everyone else, if you're able to join 9 am next week, we'd love to have you. Good morning, good afternoon and good evening. We will talk with you all next week.

Lei Xing:
Same here, talk to you guys. Byebye.

Tu Le:
That brings us to the end of this week show. Lei and I thank you for tuning in. My name is Tu Le and you can find me on twitter @sinoautoinsight. You can find Lei on twitter @leixing77. If you wouldn't mind rating and or reviewing us on Apple Podcast, Spotify or wherever you grab your podcast from, we'd appreciate that as well. Even better if you enjoy this show, please tell your friends about it. Please join this again next week as we track down all the latest news on China EVs & More.